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Following the sub prime mortages

Discussion in 'The Economy' started by Stonewall, 6th Sep, 2007.

  1. Stonewall

    Stonewall Member

    9th Aug, 2007
    Im after sources to keep up to date on the effect of the sub prime mortgage crisis. I thought I had a bit of a handle on it, but my dad told me next month (this month) companies are going to start attempting to sell off their debts: I wanna be in the loop for things like that.

    Currently I've been hitting ABC business, and Yahoo7 finance websites, but they are not giving me the commentary I'd Ideally like. Anyone have any favourite site/podcasts/etc they find useful?
  2. Tropo

    Tropo Well-Known Member

    17th Aug, 2005
    Try below link,
    Business denies sub-prime is a crisis - Breaking News - Business - Breaking News


    "Credit squeeze hits Aussie banks
    Australian banks are having to shift billions of dollars of loans from separate investment vehicles back onto their balance sheets as a global credit squeeze cuts off the supply of once-abundant funding.

    National Australia Bank, Australia's top lender, could potentially bring back $11 billion, while ANZ may bring back $5.5 billion in loans to their books.

    Rivals Commonwealth Bank and Westpac may have to follow suit.
    The return of securitised assets back to balance sheets is an indication of how the turmoil in global credits markets is beginning to impact the big lenders in Australia, analysts said.

    "If the credit conditions deteriorate further and we see corporations become distressed...that is when you see write offs for the banks. At this stage, there will be a rise in delinquencies and an up-tick in non-performing loans and write offs," said Angus Gluskie, a portfolio manager with White Funds Management.But in this circumstance, where they do have to take them back on, they are moving back into a higher risk position," he said.
    The conduits funded their purchases by selling short-term commercial paper, which was once considered a relatively safe home for investor cash. Recently, however, the appetite for such paper has all but dried-up as lenders turn risk averse.

    As a result, the banks are having to run down their conduits and take the loans onto their own balance sheets, so restraining their ability to lend for other things.

    Westpac said its exposure is about $6 billion, while analysts estimate Commonwealth Bank has about $2.2 billion in conduit assets."
  3. Rob G.

    Rob G. Well-Known Member

    6th Jun, 2007
    Melbourne, VIC
    Oh dear, all the smoke that hides off-balance sheet assets has blown away.

    The banks will need to hold a lot more cash as a buffer now (bank regulations) which will reduce their ability to lend.

    Double whammy to the ROA figures eh ?

    Also, all these 3rd party securitisers will be running out of on-sold bank debts to write their 'mortgage backed securities' just at the time people might be looking to buy debentures etc. in a rising interest rate environment.

    That is the problem with the modern global economy, everything is inter-dependent.